Even as someone who has a financial education from a top business school, it took me some time to get accustomed to and learn about my own personal finances. I have a passion for learning about and understanding personal finance, which is something that I’ve come to the realization that many people don’t have. And even more amazing to me is that many people don’t care or have the inclination to learn about their finances or financial situation.
While I’ll agree that for many people, it’s not necessary to understand every little aspect of their money, throughout the years, I’ve realized that there are certain factors that are more essential to know about when it comes to personal finances.
According to the US Bureau of Labor Statistics, the average expenditure per consumer unit in 2012 was $51,442. What your personal expenses are could range significantly compared to this average though. This is why I’ve been tracking our own family expenses for years. It helps us to better understand where our money is going and in what amounts, where we have room to cut, and see how our expenses increase or decrease from year to year. This also allows us to develop a personal inflation rate, which helps us better predict and forecast future costs and cost increases.
Determining annual income might seem like a no-brainer to people with a regular job. You know your salary or hourly rate, and that’s that. But is it really?
What about investment earnings on stocks or a retirement account? How about interest on savings, savings bonds, or a certificate of deposit? Having a garage sale, reselling stuff online or at a local consignment shop, or doing a little freelance work on the side can boost earnings too. And on the flip side, how much of your regular income was sapped by things like income and employment taxes and insurance before you ever saw your paycheck?
This is why tracking income can be a real eye-opener to what you think you earn versus what you actually put in your pocket throughout the year. And being able to pair this against annual expenses provides a more accurate look at what your money is doing and how much of it you’re actually keeping.
According to Nasdaq.com, “Over 65% of American adults have a net worth under $100,000. In Australia, over 65% of all adults have a net worth exceeding $100,000.”
I started tracking my own net worth back in the early 2000s. It’s proved a beneficial tool to help me better understand my financial situation and well as review progress over time and individual asset growth, reduction and performance. A simple spreadsheet listing assets versus liabilities is all it takes to provide me a quick glance at this information whenever I need it.
How to check credit reports and scores
Nowadays, age 30 might be a little late for knowing how to get pertinent information relating to your credit. Just 10 years ago, such information was as big a deal since identity theft wasn’t as prevalent. However, these days, being able to get free credit reports through sites like AnnualCreditReport.com or a credit check/identity theft protection site can help ensure you catch any potential problems before they become bigger issues.
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Building a Revenue Producing Blog
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Preparing to Publish My First E-book
The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Calculations have not been verified by a professional. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.